The Rx for Improving Hospital Finances

by Rick Blizzard, D.B.A.

Healthcare Editor

Improving inpatient loyalty costs hospitals millions of dollars
annually. Driving these costs are the myriad of organizations that
have invested in highly defined quality-improvement processes and
staff training. Yet Gallup's work in the healthcare industry
indicates that there is no consistent "magic bullet" -- the key
lies in the identification of specific areas in each facility or
department that deserve focus. Unfortunately, these areas are often
identified by employees without a sufficiently broad perspective on
the facility's processes -- or worse, by the "squeaky wheel"
method, whereby the most frequent sources of complaint are chosen
as areas of focus.

A Successful Hierarchy

A better system is needed to target key areas. First priority
must be given to areas known to have the greatest impact and return
on time and resources. Gallup's quantitative research has
identified a hierarchy of approaches to guiding quality improvement
while simultaneously improving the facility's financial
performance.

Level One: Process*

Patients entering a hospital expect smooth and efficient
operations -- if they expect anything less, they will probably
select another facility. Efficient operations are not likely to
delight a patient, but their absence will cause dismay.
Smooth processes can include quick admissions, effective discharge
planning, and lab, x-ray, and hospital cleanliness. These
attributes, while they won't produce patient loyalty, are necessary
prerequisites.

Level Two: People**

Many quality improvement efforts -- even if they focus on
concrete action plans with measurable objectives -- go no farther
than the first level of the hierarchy, modifying policies and
procedures. They miss a true opportunity -- the chance to meet
and/or exceed patient expectations. Policy changes only produce
temporary improvement in scores if they are implemented by
disengaged staff members. Once acceptable processes are in place,
the quality-improvement effort must turn to fostering engaged
personnel. This second level includes pain management, the concern
shown by staff members, and the effectiveness with which they make
patients feel safe and secure and anticipate their needs.

Level Three: Overall Evaluation***

Process and personnel results combine to form overall patient
satisfaction. However, service retrieval is another key dimension.
Patients realize that things do not always go smoothly the first
time, and they accept this. But when problems occur, it is crucial
that they are resolved to the patient's satisfaction.

Level Four: Patient Loyalty

Patient loyalty is the key predictor of hospital financial
performance, measured by patients' likelihood to return. To produce
patient loyalty, two factors -- trust and reputation -- interact
with Level Three of the hierarchy. Trust and reputation include
such items as believing the hospital will do what is right for you
as a patient, and trusting the hospital to handle all of your
future healthcare needs.

Key Points

The most sophisticated quality-improvement process will fail if
applied to the wrong indicators. Success lies in identifying where
your organization fits in the inpatient loyalty hierarchy. Poorly
performing organizations can benefit from policy and procedure
development, but if the effort ends there, it will only succeed in
removing sources of dissatisfaction and the improvement rate will
quickly plateau. Sustained improvement also requires a focus on
higher levels in the inpatient loyalty hierarchy, and most
importantly, on the contribution of engaged staff members.

*They predict 77% of the variance at Level Two.

**Variance at Level Two predicts 79% of the variance at Level
Three.

***The combination of patient satisfaction and problem
resolution predicts 52% of the variance at Level Four.

Recommended

What would you say is the most urgent health problem facing this country at the present time? [Open-ended] Do you think it is the responsibility of the federal government to make sure all Americans have health care coverage, or is that not the responsibility of the federal government?

Trust and satisfaction are both necessary components of a facility's true objective: patient loyalty (see " The Rx for Improving Patient Finances") But patient trust is something that hospitals have to earn. Chances are, if patients report high levels of satisfaction with the facility but a lower likelihood to return, or if patient satisfaction scores are improving but the hospital's market share continues to decline, then lack of patient trust may be a confounding factor. To investigate the key determinants of patient trust, Gallup recently interviewed more than 2,800 patients from 52 facilities in 12 metropolitan areas. Of 37 tested items, five were found to be significant predictors of patient trust: The hospital is one of the best at treating the medical condition for which you were hospitalized. The hospital staff follows through with what it says it will do. Any concerns or problems you may have had were resolved to your complete satisfaction. Hospital staff treated you with dignity and respect. Overall, how satisfied were you with your hospital stay?

Leaving patients with a positive feeling about the care they received is obviously a primary goal for any healthcare organization. But the organization's viability may rest on whether those feelings are translated into a tendency to use the facility for future healthcare needs -- in other words, whether the facility is building loyalty.